The Aspects of Culture and Its Effect on Entry Mode Decisions

9951 Words Nov 10th, 2010 40 Pages

Bachelor Thesis 2010

Name: G.M.J. Smit
ANR: 619284
Supervisor: S. Xu
Date: 11th of June 2010
Word count: 7904
Organization & Strategy

Management Summary
What cultural factors influence the decision of ownership of subsidiaries from the conventional perspective or asymmetric perspective? This problem statement is the main area of research in this study. To be able to answer the problem statement several research questions have been studied

The decision for a mode of entry can depend on many different aspects. This research has been focusing on the cultural side of the entry mode decisions. The conventional point states that
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According to Ricks, Toyne and Martinez (1990) CD is a study of principal differences in the national culture between the home country of the multinational enterprise and the host country. According to McGahan and Victer (2010):
A firm’s home country is the nation with which it is identified culturally, normatively, operationally and/or by its founding. A firm’s host countries are those in which it has foreign operations (also called “foreign affiliates”), which may occur through foreign direct investment, acquisitions and quasi-diversifications by alliances, joint ventures, and long-term contracts. (p.146)
However CD is receiving a lot of criticism. CD covers up hidden assumptions and questionable methodological properties (Shenkar, 2001). Although much research has been done in this area it is important to revise on what national culture actually is and what its effect is on the decision making of organizations. Culture is looked at from the conventional point of view that the CD from country A to country B is the same as from B to A. However some say that CD is not symmetric and state that the cultural distance from country A to country B differs from the distance from B to A. The focus of this study is therefore on the aspects of culture and its effect on the entry mode.
1.2 Problem

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